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Johnson v. Real Estate Mortgage Network, Inc.

United States District Court, S.D. Texas, Houston Division

April 18, 2017

DAVID JOHNSON, Counter-Defendant.



         Plaintiff brought this action against defendants HomeBridge Financial Services, Inc., formerly known as Real Estate Mortgage Network, Inc. ("HomeBridge" or "REMNI");[1] Federal National Mortgage Association ("Fannie Mae"), individually and as Trustee for Fannie Mae REMIC Trust 2008-81; Branch Banking & Trust Company ("BB&T"); and Mortgage Electronic Registration Systems, Inc. ("MERS") (collectively, "Defendants") in the 155th Judicial District Court for Austin County, Texas. Defendants Fannie Mae, BB&T, and MERS removed the action to this court and defendants Fannie Mae and BB&T counterclaimed for judicial foreclosure.[2] Pending before the court is Defendants' Amended Motion for Summary Judgment ("MSJ") (Docket Entry No. 52) . For the reasons explained below, the motion will be granted.

         I. Factual Background

         In August of 2008 plaintiff David Johnson obtained a home equity loan secured by his principal residence (the "Property").[3] Johnson executed a $273, 000 Texas Home Equity Note (the "Note")[4]and Texas Home Equity Security Instrument (the "Security Instrument")[5] (together "the Loan Agreement") in favor of REMNI.[6]Johnson's loan was assigned to Fannie Mae in October of 2008 and has since been serviced by BB&T.[7] Johnson defaulted on the loan and BB&T sent him a Notice of Default in May of 2014.[8] Fannie Mae, through its counsel, then sent Johnson a Notice of Acceleration on January 14, 2015.[9] Johnson has not made any payments on the loan since receiving the Notice of Default.[10] Johnson alleges causes of action for (1) quiet title, (2) violation of the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"), [11] and (3-5) fraudulent court record and fraudulent claims against real property.[12] Defendants Fannie Mae, BB&T, and MERS have moved for summary judgment on all of Johnson's claims and Fannie Mae and BB&T (together, "Counter-Plaintiffs") have moved for summary judgment on their counterclaim for judicial foreclosure.[13]

         II. Defendants' Motion for Summary Judgment

         A. Standard of Review

         Summary judgment is appropriate if the movant establishes that there is no genuine dispute about any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Disputes about material facts are genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2510 (198 6) . The moving party is entitled to judgment as a matter of law if "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2552 (1986) .

         A party moving for summary judgment "must 'demonstrate the absence of a genuine issue of material fact, ' but need not negate the elements of the nonmovant's case." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam) (quoting Celotex, 106 S.Ct. at 2553). "If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response." Id. If, however, the moving party meets this burden, "the nonmovant must go beyond the pleadings" and produce evidence that specific facts exist over which there is a genuine issue for trial. Id. (citing Celotex, 106 S.Ct. at 2553-54). The nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 106 S.Ct. 1348, 1356 (1986) .

         In reviewing the evidence "the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Products, Inc., 120 S.Ct. 2097, 2110 (2000). Factual controversies are to be resolved in favor of the nonmovant, "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little, 37 F.3d at 1075.

         B. Johnson's Claims

         Because Johnson is proceeding pro se, the court construes his pleadings liberally. See Erickson v. Pardus, 127 S.Ct. 2197, 2200 (2007) ("A document filed pro se isxto be liberally construed, ' and 'a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.'" (citations omitted) (quoting Estelle v. Gamble, 97 S.Ct. 285, 292 (1976))) .

         1. Quiet Title

         Johnson seeks "quiet title" to the Property. A suit to remove cloud or to quiet title accords an equitable remedy. Katz v. Rodriguez, 563 S.W.2d 627, 629 (Tex. Civ. App.-Corpus Christi 1977, writ ref'd n.r.e.) . It exists "to enable the holder of the feeblest equity to remove from his way to legal title any unlawful hindrance having the appearance of better right." Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388 (Tex. App.-Houston [1st Dist.] 2012, pet. denied) (citations omitted); Hahn v. Love, 321 S.W.3d 517, 531 (Tex. App.-Houston [1st Dist.] 2009, pet. denied). The plaintiff has the burden of supplying the proof necessary to establish his superior equity and right to relief-that is, that he has a right of ownership and that the adverse claim is a cloud on the title that equity will remove. Essex Crane, 371 S.W.3d at 387-88; Hahn, 321 S.W.3d at 531. The plaintiff must show (1) an interest in a specific property, (2) title to the property is affected by a claim by the defendant, and (3) the claim, although facially valid, is invalid or unenforceable. Vernon v. Perrien, 390 S.W.3d 47, 61-62 (Tex. App.-El Paso 2012, no pet.) (citation omitted).

         As far as the court can tell from the Amended Petition, Johnson's primary basis for asserting that Defendants' claim on his title is invalid or unenforceable is that the entire loan transaction is "null and void" because the original lender failed to disclose the "real party" or "real terms" of the transaction by failing to disclose its intent to sell his loan.[14] Johnson had notice that the loan may be sold, however, because the Security-Instrument explicitly states that "[t]he Note or a partial interest in the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower."[15] Johnson cites generally to the Truth in Lending Act, 15 U.S.C. § 1601 et seq., and "SEC rules, "[16] but assuming arguendo that there was a violation at the time of the original transaction, the court can find no basis under either authority to nullify the Loan Agreement.

         Any TILA cause of action is also barred by the statute of limitations, as is apparent from the face of the Amended Petition. "The general statute of limitations for damages claims under the TILA is one year after the violation." Williams v. Countrywide Home Loans, Inc., 504 F.Supp.2d 176, 186 (S.D. Tex. 2007) (citing 15 U.S.C. § 1640(e)), aff'd, 269 Fed.App'x 523 (5th Cir. 2008). "'The violation "occurs" when the transaction is consummated. Nondisclosure is not a continuing violation for purposes of the statute of limitations.'" Moor v. Travelers Ins. Co., 784 F.2d 632, 633 (5th Cir. 1986) (quoting In re Smith, 737 F.2d 1549, 1552 (11th Cir. 1984)). "The credit transaction is consummated at the moment 'a contractual relationship is created between [a creditor and a consumer] .'" Williams, 504 F.Supp.2d at 186 (quoting Bourgeois v. Haynes Construction Co., 728 F.2d 719, 720 (5th Cir. 1984)). The credit transaction at issue was consummated on August 8, 2008. This suit was brought on February 26, 2016, more than seven years later. Plaintiff's TILA claims are therefore time-barred.

         Johnson alleges no other factual basis for his quiet title claim. Johnson's remaining allegations are conclusory, unsupported, and raise no genuine issue of material fact as to the validity of Defendants' claim on title. Accordingly, summary judgment is appropriate on Johnson's quiet title claim.

         2. Violation of the DTPA

         Johnson argues that Defendants, specifically REMNI, violated § 17.46 (b) (24)[17] of the DTPA by failing to inform him that it intended to sell his loan. "To prove a violation of the DTPA, [a] plaintiff [] must prove that: (1) [he is] a consumer, (2) victimized by false, misleading, or deceptive acts, failures to disclose, or an unconscionable course of action, (3) which was a 'producing cause' of damages." Streber v. Hunter, 221 F.3d 701, 727 (5th Cir. 2000) (citing Doe v. Boys Clubs of Greater Dallas, 907 S.W.2d 472, 478 (Tex. 1995)). Johnson had notice that his loan may be sold.[18] Moreover, as Counter-Plaintiffs argue, Johnson's DTPA claim fails because he is not a consumer.[19] "Generally, a person cannot qualify as a consumer if the underlying transaction is a pure loan because money is considered neither a good nor a service." Fix v. Flaqstar Bank, FSB, 242 S.W.3d 147, 160 (Tex. App.-Fort Worth 2007, pet. denied) (citing Riverside National Bank v. Lewis, 603 S.W.2d 169, 173-74 (Tex. 1980)). Because there is no evidence before the court that the transaction at issue was anything other than a pure loan, the court concludes that Johnson is not a "consumer" under the DTPA. Accordingly, summary judgment is appropriate as to Counter-Plaintiffs on Johnson's DTPA claim.[20]

         3. Fraudulent Court Record and Fraudulent Claims Against Real Property

         Johnson claims that Counter-Plaintiffs violated Chapter 12 of the Texas Civil Practice and Remedies Code by filing "knowingly fraudulent documents" and asserting fraudulent claims against real property in their initial foreclosure action.[21] Section 12.002(a) states that a person may not make, present, or use a document or other record with (1) knowledge that the document or record is a fraudulent court record or a fraudulent lien or claim against real property or an interest in real property, (2) intent that the document be given legal effect, and (3) intent to cause the plaintiff physical or financial injury or mental anguish. Tex. Civ. Prac. & Rem. Code § 12.002(a). Counter-Plaintiffs argue that Johnson has offered no evidence to support his fraudulent court record and fraudulent claims against real property claims. The court agrees.

         Insofar as Johnson's claim relies on the invalidity of the assignment from REMNI to Counter-Plaintiffs, he lacks standing to challenge that assignment. See Reinagel v. Deutsche Bank Nat. Trust Co., 735 F.3d 220, 227-28 (5th Cir. 2013) (holding that a debtor lacks standing to challenge an assignment to a third party on a basis that renders the assignment merely voidable rather than void ab initio). Johnson offers no response to the Counter-Plaintiffs' evidence that BB&T holds the Note on behalf of Fannie Mae and no evidence to support his allegations.[22] Accordingly, summary judgment is appropriate as to Johnson's claims of fraudulent court record and fraudulent claims against real property.

         C. Counter-Plaintiffs' Claim for ...

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